biz ladies 09: making a strategic business plan

today we’re lucky to have meg touborgback with us to discuss creating a strategic business plan. one of the things i hear about the most at biz ladies meetups is “how do i create a business plan? they seem really daunting…”. thankfully meg is here to break down the process and teach us how to get our businesses in order and mapped out on paper. whether you’re a new or old business, this is a must- read. organization is key for any small business and having your financial and strategic goals planned out is always helpful when you’re looking to find funding, investors, a new partner, or just keep yourself inspired.

Since mid-2008 we have been living, working and surviving in uncertain times. As the owner of an independent business, you likely have faced challenges such as restructuring your business model, adjusting how you and your staff interact with customers, living with fluctuations in billing structures and an increase in the number of hours you and your staff work. It has not been an easy time!

So, if you don’t have a strategic plan already in place, now may be an excellent time to take stock of your hopes, dreams and realities and draft a roadmap for yourself and your organization. If you do have an existing plan, it’s a good time to fine-tune and update it. When I was in summer camp, one of my favorite activities was orienteering. With the aid of a compass and a topographical map, we had to figure out how to get from A to B in dense forests. It was before GPS, and there were no easy answers as this activity required thoughtfulness, courage, creativity and a spirit of adventure in knowing that there are many ways to ones destination. As a Biz Lady, this memory is the best analogy to the process I encourage in conceiving and establishing a strategic plan for your business. Strategic plans aren’t scary, they don’t have to be too formal, and yes, they can actually be fun to draft.

1. What’s the purpose?

o Organize your goals and measure your progress. By doing so, you will ensure you stay true to your larger mission. Don’t sink into “everything’s bad so why bother” or, on the other side of the spectrum, “everything’s good so why stop and think.” It’s important to take consistent temperature checks.
o Allocate resources. You only have so much time, money and people, and you want to “spend” them on the priorities that matter to your end goal. From your strategic plan, you can set monthly budgets for yourself and your team.
o Explain your business to a trusted outsider to ask advice, to form a collaboration or raise money (”capital”) from sources such as a bank or individual investors.
o Establish early documentation, as you might want to sell a part of your business one day.
o Create a receptacle for your ideas so you don’t lose them and can revisit and adjust as your financial situation changes.

2. What’s in it?

A strategic plan “articulates” your business in words and numbers and, for us in creative fields, may include visual images as well. Use your logo, color palette, font style and images to make a business document that looks like you and the messages about your brand you hope to communicate. Place your contact information at the back of the document and list your Web site, in case you share the document with outsiders.

Include a table of contents with the following sections, arranged in an order that makes sense to you

o Cover page or frontispiece: Consider an image that is important to you about your business. Examples: A print, a room shot, a product sketch, a collage, a customer engaged with your product or service. Or, even, include a picture of yourself.
o Executive Summary and Mission: Write a paragraph to communicate the nature of your business, i.e. when it started, its primary purpose, how it distributes its services and its intentions for the next few years. If you have a mission statement, include it here. If you don’t, consider creating one.

Example: I worked for a design-driven company years ago that sold women’s handbags and its mission was to be the most interesting accessory company in the world. This future-looking statement let us plan to be more than handbags and to add shoes, jewelry, sunglasses, perfume and other categories, as well as establish global distribution.

3. Marketplace and Operations

How does your world operate? Where is your company positioned in it versus your competitors? You are accustomed to thinking about your biz from the inside out; flip the mense and look at yourself from the outside in.

4. Opportunities

Write down the specific goals you have to move forward with from your mission statement and marketplace. Depending on your specific business, you might also include sketches or other images to document your ideas.

Examples you could organize these by year:

2009: -Preserve cash and best customer’s biz

-Build customer database of names for email blasts

-Negotiate cost reductions

2010: Add product line XYZ and/or gain new customers by doing ABC

-Update brand identity

– Communicate company through a new Web site

-Open research and development studio

5. Financial Projections

Many of the goals you just described with words now have to be converted to decisions of data and projections. You will likely turn this section of the strategic plan over like a hot potato to your controller/CFO (if you have one) or an accountant. Many business schools are also great resources for someone who may be looking for a project—maybe even for free for the experience! Otherwise, plan to spend no more than $500-$1,000 to get started.

Your Financial Partner will record the current year results, maybe the two prior years, and then three outgoing years moving forward. You will want to consider how much can you expect your core business to grow, or might it decline? How much more business from new customers, products or services can you anticipate? If you don’t know for sure, make assumptions and just keep going. It is likely this stage will take several iterations to get it balanced and realistic. Then, your financial partner will take these inputs and make assumptions about the nuts and bolts such as professional service (legal, bookkeeping, etc) insurance, property, and eventually create a complete financial picture of your biz including projected profitability and cash flow.

6. Risks and Opportunities

For this “chapter,” ask yourself, “What could go wrong? And what might go better than expected?”

Acknowledge things out of your control (economic environment, rising fuel costs, raw materials shortages, currency fluctuations if you work internationally) and also things within your control (new hires that don’t work out, customers who don’t accept new products at rates projected, the inability to find new customers at fees expected, the inability to find new real estate at prices or timing planned). Once you assess these risks, you may be compelled to return to your projections and reduce them.

Counterpoint: “Ah but…”

What are the other ideas you have that you LEFT out of the projections? Is there a possibility of a whole new channel of business? Participating in new trade shows? Hiring a press agent? Initiating or expanding an advertising campaign? Hiring a senior partner? Possibility of international growth? Merge with another business? Jot down the other ideas that don’t feel secure enough to go into the current year’s projections but that still excite you when thinking of the future.

7. Appendix

Are you big enough to have an organization chart? Draft one for this year, as well as the third year showing the positions you intend to add.

Share the organization chart with your staff (unless you intend to keep these plans confidential) to get ideas, anticipate challenges and to begin the process of buy-in. Also share the chart with your advisors; accountant, trusted business associates in a non-competitive business, company lawyer, etc.

8. Living with your plan

* Don’t intimidate yourself and get too complex! Put ideas down and move onto the next chapter if you feel overwhelmed. You can always improve and add details later.

* Update the plan on a quarterly basis with actual numbers and words. Your reality may have shifted or a new opportunity may have risen.
* Regard the plan with respect, but not rigidity.
* Distribute the non-confidential parts to your team so all are informed of your recommendations to execute your vision.
* Be proud of your past accomplishments (…especially in these rocky times) and use this momentum to guide your future.

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ABOUT MEG TOUBORG

Meg combines her love of design, fashion and culture into her career as “the business side of creative people and entrepreneurs.” Her past roles have spanned from product development, to sales, to operations and marketing and licensing for premium brands such as Saks Fifth Avenue, Coach, Kate spade and Waterworks. She has 3 children and enjoys involvement in the public schools. In 2007, she became an entrepreneur herself and with her business partner, founded Design Investors LLC in Westport, CT

ABOUT DESIGN INVESTORS LLC

Design Investors LLC was established with a singular objective: to support the growth and profitability of the design industry’s most promising product, business service, and media companies. The firm partners with founders and management teams of portfolio companies to infuse creativity with capital, and reinforce business plans with an extensive resource network and many years of relevant management experience. Appreciating the unique vision and opportunities available to each investment, Design Investors works side-by-side with companies to maximize value through building market leadership positions. www.designinvestors.com

I have passed this on to my husband. he has a lighting business and has been talking…talking about doing a business plan. i know this will help greatly. thanks for posting grace and thanks to meg for the great info

Bryn – Have you contacted the SCORE office in your area? I met with a volunteer counselor, and they’re helping me write my biz plan start to finish. They’ll even help you present to the SBA if you need a loan.

i look forward to these every week–they offer so much inspiration and knowlege. but they also foster a real sense of commeraderie among designers/business owners which is so refreshing to see in the marketplace. thanks, grace, as always, for sharing your wonderful resources. and, of course, thanks meg for your insights!

Dang, design*sponge, you guys are really cooking today! Between the Richmond guide and this, I have my reading cut out for me. : )

I agree about SCORE. It’s a great program…the volunteers there have a vast amount of experience, and they love to help new entrepreneurs. Plus, you can make good connections with people who already have a history in your industry.

I have been needing some guidance as to doing one so thanks Meg!
I want to open up a communal office space in the town I live in.
I would like to attract creatives and small business owners. With many people’s income reduced these days it would be a great way to have an office but share in the expenses.
I would love to get everyone’s opinion- would a space like that appeal to you or would you prefer to rent your own office?
Thanks!

Great post! I also wanted to share a fantastic resource that has been so helpful for me in coming up with a plan:
The One Page Business Plan by Jim Horan (www.onepagebusinessplan.com). It’s basically a workbook full of creative exercises that help you to create a usable plan that is only one page long. It really helped me to think through and boil down my ideas and goals to their essence. I am allergic to organization, but I found the process fun and not overwhelming.
I also love the portability of a single sheet of paper. I keep mine tacked to my inspiration board to keep me inspired/on track.

Great post and wwritten in a way so that’s it’s not intimidating. I could do this!!!
Jessica: I’m an interior designer in N. Calif. and several of my friends have talked about sharing space as well. We would share fabric/sample libraries and office expenses, while still maintaining our own businesses. We’re still in the researching stage but I think with some ground rules, its a great option.

So glad I have found the Biz Ladies 09, each installment is better than the last. I have been regrouping, setting goals for the last 8 months and this column has helped so much. You put it in a clear and simple outline easy to follow regardless of what the subject is. I have been in business for nearly 20 years and I never seem to stop learning. Thank you Grace.

Regarding the cover – forget the adage that people don’t judge books by their covers, because they absolutely do. Busy investors and bankers usually receive more plans than they have time to look at. Naturally, they’re going to gravitate to look nicest on the outside.

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